Five Ways to a Good Retirement
For many of us the notion of retiring at all seems like a pipe dream. College costs, weddings, the unceasing increased cost of living and falling incomes all conspire to steal the retirement dream away from many baby boomers. They just started entering the retirement age  last year. Still it does not have to be this hopeless. The experts at Fidelity Investments just conducted a survey and there are five easy steps to capturing that retirement you dream of if you are willing to get serious about the matter.
1.) Save more: Now this sounds painfully simple but the people who crunch such numbers say saving just 1% more than you are saving now [assuming you are] will get you the nest egg you will need at retirement. In fact Gen X’ers appear to understand this and are jumping in with both feet.
2.) Good Asset Allocation: This is financial speak for not putting all of your eggs into one basket. Still knowing which baskets to use and what kinds of investments will work best for you is not an easy task. The best answer is to pay a fee based financial planner to make a plan for you and discuss with you proper asset allocations for your portfolio. This will change, by the way, as you get older. When you are young you are about growing your money. As you get older, you must be more careful and put more energy into preserving your hard earned gains. You can find a good fee based planner on the Paladin Registry. You’ll find it @ http://www.paladinregistry.com/
3.) Plan Your Retirement: Most of us spend more time planning that summer vacation than we do our retirement and yet you will likely spend years in retirement. Now, you might want to work, you might have to work, you might want to see the world and you might want to hang on the beach. Considering what you and your spouse will want in the “golden years” is something you will want to take the time to think seriously about.
4.) Use Your Home Equity: When you get to retirement age and you own your house outright [or only owe a little on it], there is much value to be found in downsizing. Granted in the current housing conditions this is more difficult than in previous times. But selling your home, taking that cash and using it to fund your retirement [or part of it] is a great idea. But, this does require serious thought and planning. If you haven’t sold a home in a while, today’s buyers have high expectations for updated kitchens, baths and curb appeal. This process could get expensive. Deciding whether all of that work is worth it matters greatly. Another way to use home equity is through a reverse mortgage. But these are very tricky and require a lot of investigation and thought before using this tool in the tool box.
5.) Annuities: Speaking of very tricky tools in the tool tox. Annuities can be useful and Fidelity says it has a program where they are quite effective in retirement. I am less convinced of this. While sold as a good investment, Annuities are not. They are insurance products. That matters because the health of the insurance company could determine whether you get your payouts [or not]. What’s more, annuities come with massive fees on the front and back end. They also come in more flavors than Baskin Robins and many of them are decidedly NOT helpful for seniors. The only way to go in this space is with an immediate fixed annuity and only if it makes sense for your lifestyle and financial position. I would check with a fee only financial planner [and one who makes no money selling annuities] to help you decide whether it’s a good idea for you.
For more on the Fidelity Retirement Study it is linked here: http://www.americanretirementinitiative.org/site/epage/133197_1022.htm